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EUR Shrugs Off Slip in Inflation Expectations, Soft PMIs

  • The EUR trades well, shrugging off early weakness on the back of a shaky set of final PMI numbers from across the EU: Italian, Spanish, German and the Eurozone composite PMIs came in short of expectations. Added weight went through on the Eurozone consumer survey, showing a further retreat for short-term inflation expectations in the Euroarea - a release that tipped EUR/USD to a daily low of 1.0866.
  • Traders were clearly content to buy the dip in the single currency, helping put the likes of EUR/GBP, EUR/USD back in minor positive territory ahead of the NY crossover.
  • CNY trades poorly, with USD/CNH back above 7.25 despite a continued push from Chinese authorities for more stability across the yuan. Many large Chinese banks are to cut their USD deposit rates on corporate accounts for the second time in as many weeks, however a lower-than-expected Caixin services PMI has weighed, keeping the pair within striking distance of the 7.2857 cycle highs.
  • US Factory Orders for May are the data highlight ahead, with markets expecting orders to have risen by 0.8% on the month. The data precedes the FOMC minutes for the last rate-setting meeting at which the Fed paused the pace of tightening for the first time this cycle.
  • The speaker slate sees ECB's Villeroy and de Cos as well as Fed's Williams at the US market close.

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